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Deposits and the Death of a Tenant

Where the property is rented by a sole tenant what should landlords do with the deposit when the tenant dies unexpectedly?

Under English Law, an assured shorthold tenancy does not end automatically on the death of a tenant. Consequently, landlords cannot make deductions or return deposits until the tenancy is brought to an end. If the tenancy is still within the fixed term, then the tenancy will pass to the tenant’s estate. If the tenancy is a periodic tenancy, then the tenancy will again pass to the tenant’s estate but the landlord will be easily able to serve a section 21 to bring it to an end.

Whatever the scenario, if the tenancy is brought to an end and the landlord needs to make deductions from the deposit or return the deposit he will need to liaise with someone that has the authority to act on behalf of the deceased tenant’s estate.

Where the tenant has left a will, the landlord will liaise with the executor named in the will. Where there is no will the landlord will need to liaise with the court appointed administrator who could be the tenant’s family member or, in the absence of any family, the Public Trustee, a specialist Court officer. As a first step it is usually worth contacting the Public Trustee to establish if they are acting unless someone else has identified themselves as acting.

Landlord’s and/or their agents are strongly advised to request and obtain proof of the third parties authority to act for the deceased tenant’s estate prior to entering into any negotiations to end the tenancy or deal with the deposit. Obtaining this proof can take some time which can be very frustrating for all those concerned however, in the absence of such proof it can be difficult to deal with the end of the tenancy, never mind the deposit!

Once the executor or administrator is known the landlord should seek to agree deductions with that person along with a surrender of the tenancy. If this can be done amicably then there should be a written deed of surrender and this should make clear where the deposit is to go. At that point it should be a simple matter to apportion a deposit held by an insured scheme as the agent will be holding the deposit. If there is no such agreement, then it will again be necessary for the relevant person to prove to the dispute scheme that they can act for the deceased tenant. Once that has happened then the usual dispute process must be followed with the authorised person standing in the stead of the deceased tenant.

With a custodial scheme the position is a little more complex. The executor or administrator may have the necessary information to log into the custodial system and agree deductions. If that is not possible or the deductions are not agreed, then the relevant procedure explained by the specific deposit scheme will need to be followed. Essentially the relevant person will need to show that they have the authority to deal with the deposit to the scheme. Once that has happened then the usual dispute process must be followed with the authorised person standing in the stead of the deceased tenant.

Conclusion and Comment

In general, it can be a stressful process for all concerned in dealing with deceased tenants but the crucial first step is to establish who has the legal authority to act for the tenant and then to deal with that person as if they were the tenant.

Practically, we are aware that landlords and agents take the risk of negotiating the surrender of a tenancy and the return/deduction of deposits with the deceased tenant’s family in the absence of any paperwork. This carries the risk that someone with the proper authority to act could come knocking seeking an explanation for the actions taken in his/her absence with the result that the landlord or agent could be required to refund any monies taken without the proper authority.

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